WTO raps EU in IT suit as Brussels complains

GENEVA (Reuters) - A World Trade Organisation panel gave broad backing Monday to the United States, Japan and Taiwan in their complaint over controversial European duties on electronics products, and told Brussels to bring its trade measures into line with international rules.

The panel said the EU had imposed the duties on flat-panel displays, multifunction printers and television set-top boxes in violation of the WTO's Information Technology Agreement (ITA).

The European Commission had already criticised the 704-page ruling before it was published, repeating its view that negotiations on a comprehensive revision of the agreement were preferable to litigation on only a few aspects of it.

"The report does not establish general principles that would imply any form of generalised conclusions," it said in a statement. "Negotiations are the vehicle for mutually beneficial liberalisation."

But it remains to be seen how seriously the EU's partners will take the call for negotiations on a revised agreement when they believe Brussels is not even living up to the existing one.

Japan's minister of economy, trade and industry, Masayuki Naoshima, welcomed the ruling and called on the European Union to remove the illegal tariffs immediately.

And U.S. Trade Representative Ron Kirk said the United States had won an "important victory."

U.S. and Asian electronics producers such as Hewlett-Packard Co, are keenly awaiting any sign that the EU might appeal the WTO panel's findings.

The parties now have 60 days in which to appeal, but the Commission said Brussels had not yet decided whether to do so.

SCREENS

The ITA agreement, which is voluntary, abolished tariffs among 72 countries on products such as computer screens and printers to foster trade in high-tech goods.

But the European Union argued that added functionality since the agreement was reached in 1996 meant that some products were now consumer goods rather than information technology, and so were not entitled to the zero tariffs under the deal.

For instance, it said flat-panel computer displays could also now serve as television screens.

Brussels subsequently imposed duties ranging from 6 to 14 percent on the products, $11 billion (7 billion pounds) of which the EU imported from all suppliers in 2007.

"This ruling affirms the principle that changes in technology are not an excuse to apply new duties to products covered by the Information Technology Agreement," U.S. trade chief Kirk said in a statement.

The U.S. Information Technology Industry Council also welcomed the ruling and said it was encouraging that Taiwan and Japan had fully backed the United States.

"For us, it was a clear indication that the ITA, which is extremely important for our industry, is alive and well, and we're very pleased with the outcome," John Neuffer, council vice-president for global policy, told Reuters.

The three countries launched the case in June 2008. In September of that year Brussels proposed updating the agreement to take account of new technologies, a week before the three plaintiffs secured the creation of a WTO panel to rule on the dispute after consultations had failed to resolve it.

Officials in Taiwan said last month the ruling would save its exporters of flat-screens up to $611 million a year in tariffs.

Major flat-screen makers in Asia include South Korea's Samsung Electronics and LG Display and Taiwan's AU Optronics.